Question

Write 1-2 paragraphs for each part using economic concepts
to explain the main idea from
(a) Is slow still the new normal for GDP growth?
(b) The Central (Bankers`)

Answer 1

(a) The developed countries grew exponentially in 19th and 20th century as they were still progressing and developing. They have stabilised now as they don't have to invest much on infrastructure, this is the reason why developed countries are now growing in single digits which is the new normal as the base of previous years is also high.

In case of developing countries which were growing tremendously, now because of global growth slowdown are growing slowly in single digits which is abnormal for them, as they have tremendous scope for infrastructure and investment. Thus slow growth is normal for developed countries but not for developing countries.

(b) Central bankers play an important role in managing growth and inflation in countries. They are expected to be autonomous and maintain the banking system in the particular country. They also control the liquidity situation by conducting open market operations and conducting currency swaps so that economy has adequate liquidity available.

Central bankers are essentially the policy makers of a country to provide an impetus for further investment and growth. They analyse the current market trends and hold bi-monthly meetings to address current situation and constraints faced by the industry and country.